Minnesota Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.

For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!

Except for the construction industry, Minnesota applies the common-law criteria for determining if an individual is an employee or independent contractor for unemployment compensation purposes (MN Stat. Sec. 268.035).

Minnesota law specifically excludes individuals who are independent contractors as defined by Department of Labor and Industry regulations (MN Stat. Sec. 176.041). The regulations set out “safe-harbor” criteria for numerous specific occupations and tests for occupations not specified (MN Rules Ch. 5224). The most important factor in determining whether a person is an independent contractor in a nonspecified occupation is the degree of control that the purported employer exerts over the manner and method of performing the work contracted (MN Rules Sec. 5224.0330). The more control there is, the more likely the person is an employee and not an independent contractor. The rule lists 13 factors to weigh in making this determination. In addition to factors of control, factors listed in the rule (MN Rule Sec. 5224.0340) include whether: